Why say no to diesel?

In the previous blog post, we spoke about the 'Enabling Clean Talking' report released by Greenpeace. The report basically urges the Telecom Industry to switch to renewable sources of energy from diesel to power the ubiquitous mobile towers that are springing up all over the country to serve the ever increasing consumer base.

To understand more, let us look at what the 'Diesel conundrum' is all about. Recently, Economic Times carried a piece that spoke about how oil marketing companies including IOC, HPCL and BPCL are losing Rs 19.26 on every litre of diesel sold.

Some of the main points of the article:

Indian Oil Corp (IOC), Hindustan Petroleum Corp (HPCL) and Bharat Petroleum Corp (BPCL) are losing close to Rs 560 crore per day as they sell diesel, domestic LPG and kerosene way below cost to keep inflation under check.The Oil ministry sought cash subsidy for the remaining Rs 32,750 crore but the Finance Ministry has not released any.

What do the above mentioned figures mean? What is the story behind these statistics?

In India diesel is sold mostly by government-held entities like The Indian Oil Corporation , Bharat petroleum and Hindustan Petroleum Corporations (the OMCs or Oil marketing companies). Diesel in India is a regulated commodity. This means that the Government sets the selling price of diesel to be sold in the Indian market, a price much lesser than the purchasing rate, thereby shouldering the burden of the consumers. Diesel is used in a variety of ways. Right from being used as a transportation fuel to helping in power generation in industries and agriculture! The Government subsidises diesel owing to its large need by several sections of society, mainly the farmers, who would be unable to bear the market cost simply because it is very expensive. While crude oil prices have soared up over the past many years, the price of diesel has not increased much.

How does the telecom industry figure in this picture?

India has more than four lakh mobile network towers spread all across the country. The number is only set to grow as the number of mobile subscribers in India is all set to hit the billion mark by 2013-14. The mobile towers need a continuous stable supply of electricity 99.99 % of time to function. If not, one can expect drastic fall in the revenues of the sector.

Mobile towers are spread across different parts of India—areas that receive different levels of electricity. Close to 50 per cent of the towers are present in areas that receive only approximately 6-12 hours of power every day. Close to 15-20 per cent of the mobile towers are in areas in India do not receive grid electricity but have mobile towers!

Most mobile towers receive continuous energy when most parts of India face power outages on a regular basis. How?

The wonder fuel that makes this possible here is Diesel. An estimated 3.2 billion litres of diesel was consumed by the telecom industry last year alone! It is expected to hit 6 billion litres by 2020! Can you imagine the cost the Government has to bear?

The Indian telecom industry has been the second largest consumer of diesel after the Indian Railways! How fair is it for a cash-rich Telecom Industry to be using a subsidized fuel i.e. diesel for commercial purposes? This, when there are alternatives that are available! If we reduce the consumption of Diesel, not only would we be reducing the pressure on the Government and but also on the environment.

The subsequent posts will look into how use of renewable sources of energy is actually profitable for the Telecom Industry. To understand more about the issue, please have a look at 'Enabling Clean Talking' campaign page.